A strong earnings season for big U.S. banks continued Wednesday when Morgan Stanley (NYSE: MS ) reported record first-quarter earnings and revenue. Morgan Stanley's big earnings beat was driven by its trading unit, and shares of MS stock initially traded higher by nearly 1 percent on Wednesday.

Morgan Stanley reported earnings per share of $1.45 on revenue of $11.1 billion. Both numbers beat consensus analyst expectations of $1.25 and $10.36 billion, respectively.

Fixed income, commodities and currencies trading revenue was $1.9 billion on the quarter, well ahead of consensus expectations of $1.67 billion. Equities trading revenue of $2.6 billion also handily beat expectations of $2.2 billion.

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Overall investment banking revenue was up 7 percent year-over-year and up 5 percent from the fourth quarter.

"We delivered very strong results this quarter, with record revenues and net income, and an ROE above our target range," CEO James Gorman says in a statement. "Each of our businesses performed well, with significant client engagement across our global franchise, and Sales and Trading a particular highlight in a more active environment."

Net income for the quarter was a record $2.7 billion, up 40 percent.

Morgan Stanley reported an effective tax rate of 20.9 percent and said it bought back 22 million shares of stock in the first quarter after repurchasing 25 million in the previous quarter.

Big bank earnings season has been generally positive, but Nomura Instinet analyst Steven Chubak says Morgan Stanley's quarter was exceptional.

"Relative to peers, Morgan Stanley produced standout results," Chubak says in a note on Wednesday, according to CNBC.

Bank of America analyst Michael Carrier says the positives from Morgan Stanley's first quarter outnumber the negatives by a ratio of two-to-one.

Carrier says Morgan Stanley's return on equity of 15 percent was ahead of expectations of 10 to 13 percent. While capital ratios remain healthy, Carrier says declines in the common equity tier one ratio (which dropped to 15.6 percent) and the supplementary leverage ratio (which declined to 6.3 percent) were among the few negatives in an otherwise stellar quarter.

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"Overall, a solid quarter for MS, and while a beat driven by trading may not be viewed as sustainable, given healthy growth trends across segments, operating leverage, and cost/capital management, we like the risk/reward," Carrier says.

Bank of America has a "buy" rating and $63 price target for MS stock.

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